U.S. District Judge Dee Drell struck down an ordinance outlawing fortunetelling, astrology, palm reading, tarot, and other forms of divination on the grounds that the practices are fraudulent and inherently deceptive. The case involved a fortuneteller named Rachel Adams who sued to overturn the law and won.

About one in seven Americans have consulted a psychic or fortuneteller, and their services are in high demand, especially during hard economic times. This curious case raises issues about the boundary between freedom of speech and fraudulent (or at least unproven) claims.

There are, of course, exceptions to free speech that go beyond yelling fire in a crowded theater. People who lie on their tax returns can be convicted of tax evasion, and those who lie in a court of law can be convicted of perjury, which under federal law is a felony. Companies, also, are legally prohibited from making false statements about their merchandise; Ford cannot claim its cars get 200 miles per gallon, and vitamin manufacturers cannot advertise that their pills cure cancer. But other cases are murkier.

Free Speech and The Right to Lie

Last month the Supreme Court ruled that Xavier Alvarez, a public official who falsely claimed that he had received the Medal of Honor, could not be prosecuted under the Stolen Valor Act, a 2006 law that made it a crime to falsely claim “to have been awarded any decoration or medal authorized by Congress for the Armed Forces of the United States.” Alvarez admitted that his statements were false, but claimed that his lies were free speech protected by the First Amendment. The Supreme Court agreed and overturned the law.

The First Amendment freedom to lie and misrepresent matters of fact was even invoked by top Wall Street credit rating companies including Standard & Poor’s, Moody’s Investors Service, and others. In the months and years leading up to the global financial crash, these companies routinely inflated the ratings of billions of dollars worth of investments they bought and sold. When investors and investigators demanded to know why companies that were given stellar confidence ratings one day went bankrupt the next, the agencies claimed that their investment ratings were merely “opinions” not necessarily based on truth or fact, and as such were protected by the First Amendment.

Psychics and fortunetellers try a similar strategy, often offering their services “for entertainment only,” a tacit acknowledgement that the information they provide may not be reliable. Yet the fact is that—like clients of credit rating companies—the clients of psychics often do take the advice they get seriously, making life, love, and career decisions based upon fortunetelling. If clients truly are seeking only entertainment, for the $40 to $100 per hour psychics typically charge there are far cheaper ways to be entertained.

Some fortunetellers offer readings for fun and pleasure, and for the most part it’s not palm reading per se that police are concerned about, it’s the confidence schemes, theft by deception, and fraud that often accompany fortunetelling. One common scam involves luring clients in with inexpensive readings, then convincing them that a recent misfortune is the result of a curse put on them by an enemy. The imaginary curse can be lifted but it won’t come cheap, and some victims have been robbed of tens of thousands of dollars. In one recent case a “psychic” misused the influence and trust placed in him to sexually exploit several women.

How Stuff Works: Pet Psychics

The issue of fortunetelling is a tricky legal and ethical area. Although psychic powers and prediction have never been proven to exist (and indeed have failed in well-controlled scientific tests), psychics themselves often genuinely believe in their powers. Other professions can at least provide concrete proof of ability: a mechanic can prove to clients he can fix a transmission by doing it; a doctor can prove to patients she can perform heart surgery by being certified (and doing it). Psychics, on the other hand, cannot prove they can accurately predict the future; if they could, they should be making a killing on Wall Street or in highly-paid positions protecting national security.

Is it ethical to accept money for a service you cannot scientifically prove you can provide, even if you believe you can? How is that different than a lawyer who takes on a case knowing she can’t win (but pretending she can), and gets paid either way? Perjury and fraud only make it a crime to knowingly lie or misrepresent matters of fact, and fortunetellers—like Wall Street credit rating firms—can always say that their claim to psychic abilities is their (Constitutionally protected) opinion. Caveat emptor.